Topic 2 day 1

KACT, WCO Headquarters, Brussels, Belgium, June, 30 – July, 11, 2014
Harmonized System – Sets and composite goods and the HS 2017
Izaak Wind
1
Ground Rules
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Be on time
No PCs or mobile phones
Respect
There is no such thing as a stupid question
Support
Team Work
Active participation
Have fun
2
Introductions
3
Session I: Programme Overview & Positioning
Table of Contents
Day 1 – Wednesday, 9 July 2014
Introduction
Session II: Application of GIR 3
Session III: Classification of composite goods
Session IV: Classification of sets
Day 2 – Thursday, 10 July 2014
Session V: The 2017 amendments to the HS
Session VI: The HS and Customs duties
Session VII: Summary and wrap up
Session II
General Interpretative Rule 3
Session II
Mechanics of classification
The mechanics of classification involve two
separate stages:
– identification of the goods
– the use of the Interpretative Rules
Session II
The process of classification can be broken down into a series of
steps, as follows:
Step 1 : identify the goods
WII
Step 2 : Identify the possible Chapters
Step 3 : Locate the appropriate heading(s)
Step 4 : Consider the relative Section and Chapter Notes
Step 5 : Classify at the 6-digit level
Session II
GIR 2 (b):
The classification of goods consisting of more than one
material or substance shall be according to the principles of
Rule 3.
Session II
RULE 3
CLASSIFICATION OF GOODS
CLASSIFIABLE UNDER TWO OR MORE HEADINGS
Three methods of classification:
(a) Most specific description
(b) Essential character
Rule 3 (a)
Rule 3 (b)
(c) Heading which occurs last in numerical order
To be operated in order: (a), (b), (c)
Rule 3 (c)
Session II
EXPLANATORY NOTE
(I)
This Rule provides three methods of classifying goods which, prima
facie, fall under two or more headings, either under the terms of Rule 2
(b) or for any other reason.
These methods operate in the order in which they are set out in the
Rule. Thus Rule 3 (b) operates only if Rule 3 (a) fails in classification, and
if both Rules 3 (a) and (b) fail, Rule 3 (c) will apply.
The order of priority is therefore (a) specific description; (b) essential
character; (c) heading which occurs last in numerical order.
(II)
The Rule can only take effect provided the terms of headings or Section
or Chapter Notes do not otherwise require.
Session II
Rule 3 can only be applied if the terms of headings or
Section or Chapter Notes do not otherwise require.
Examples:
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Textile garments – Note 14 to Section XI: separate
classification (with a view exclusions)
Composite machines – Note 3 to Section XVI: classification
according to principal function
Sets consisting of a microphone and one or more
loudspeakers (heading 85.18)
Session II
GIR 3 (a): Explanatory Note – Most specific
Hard and fast rules?
Description by name or by class (generic – EU Court ruling C297/13)
Clear identification vs less complete identification
Session II
RULE 3 (a) - specific description
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Most specific description preferred to a more general
description
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Examples:
Tufted textile carpet, identifiable as for use in a car:
57.03 (“carpets”) more specific than 87.08 (“accessories”)
Unframed safety glass identifiable as part of aeroplanes:
70.07 (“safety glass”) more specific than 88.03 (“parts”)
Session II
RULE 3 (a) - specific description
When two or more headings each refer to:
part only of the materials or substances contained in mixed
or composite goods; or
part only of the items in a set put up for retail sale
headings are as equally specific in relation to those goods,
even if one of them gives a more complete or precise
description of the goods
Session II
Due to this language :
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Mixtures, sets and composite goods are excluded from this
provision
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Classification according to GIR 3 (b) or 3 (c)
Session II
GIR 3 (b) relates only to :
i.
Mixtures
ii.
Composite goods consisting of different materials
iii.
Composite goods consisting of different components
iv.
Goods put up in sets for retail sale
Session II
GIR 3 (b):
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Classification according to essential character
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Classified as if they consisted of the material or
component which gives them their essential
character
Session II
Essential character (Explanatory Note):
• Nature of the material or component
• Bulk
• Quantity
• Weight
• Value
• Role in relation to use of the goods
• Function
Session II
If GIR 3 (a) and 3 (b) cannot be applied:
Goods shall be classified under the heading which occurs last
in numerical order among those which equally merit
consideration
Session II
Example
Graduated dropper tubes, made up of:
• a tubular dosage measure of transparent plastic material; and
• a cylindrical teat of vulcanised rubber other than hard rubber
Classification according to GIR 3 (c): 40.14
Session III
Classification of composite goods
Session III
GIR 3 (b) refers to :
• Mixtures
• Composite goods
• Goods put up in sets
What are composite goods?
Session III
GIR 3 (b)
Composite goods are goods consisting of:
• Different materials; or
• Made up of different components
This is the legal frame work!
Session III
The Explanatory Note to GIR 3 (b):
• Goods in which the components are attached to each other to
form a practically inseparable whole; and
• Those with separable components, provided:
these components are adapted one to the other;
are mutually complementary;
together they form a whole which would not normally be
offered for sale in separate parts
Note : The Explanatory Notes are not part of the legal frame work!
Session III
Some examples of separable goods
(1) Ashtrays consisting of a stand incorporating a removable
ash bowl.
(2) Household spice racks consisting of a specially designed
frame (usually of wood) and an appropriate number of
empty spice jars of suitable shape and size.
As a general rule, the components of these composite
goods are put up in a common packing.
Session III
Session III
A good consisting of a
selection of spices,
seeds, herbs, fruit, salt
and seasonings, put up in
hourglass-shaped glass
bottles, each containing
two different products
Session III
• Mosquito net of warp knit fabric
impregnated with an insecticide: 63.04
• Cartridge for an electronic cigarette
consisting of a plastic mouthpiece and a
plastic tube containing an absorbing
material saturated with a solution
consisting of propylene glycol, glycerol,
nicotine and ethyl alcohol: 38.24
Session III
• 63.04: insecticides?
• 38.24: articles of plastic?
Session III
The answer: Rule 2 (b)
Reference in a heading to a material or substance includes a
reference to mixtures or combinations of that material or
substance with other materials or substances
Session III
Consequently:
44.12 : Plywood, (…) and similar laminated wood => covered
with plastic
42.05 : Other articles of leather => parts of textile or plastic
68.10 : Articles of cement => reinforced with metal bars
Session III
What about references in Notes?
Any reference to goods of a given material or substance shall
be taken to include a reference to goods consisting wholly or
partly of such material or substance
Session III
Example – Note 1 (a) to Section XVI:
This Section does not cover articles (…) of vulcanised rubber
The term “rubber” includes any article made of a combination of rubber
and another material AS LONG AS THE RUBBER GIVES THE WHOLE ITS
ESSENTIAL CHARACTER
A grooved pulley wheel (of cast iron) joined concentrically between a
flexible ring of rubber with a cast iron outer hub
(vibration damper)
84.83
(Picture for reference only)
Session III
The classification of goods consisting of more than one
material or substance shall be according to the principles of
Rule 3.
Note : this provision does not apply when Rule 1 is applicable!
>>>>>>>>
Session III
Some situations where Rule 1 applies :
• sheet of steel coated with plastic => heading 72.10
• nails, etc. of steel with heads of copper => heading 74.15
• And
Session III
References to mixtures and composite goods at
Section, Chapter or heading level
• Mixtures of nuts or dried fruits (08.13)
• Note 1 to Chapter 9 (mixtures)
• Note 2 to Chapter 16 (preparations containing meat, fish, etc.)
• Heading 27.10 (preparations containing petroleum oils)
• Note 3 to Chapter 56 (felt and nonwovens combined with plastics
or rubber)
• Note 2 to Chapter 59 (textile fabrics combined with plastics)
Session III
Typical example at Section level
Note 7 to Section XV (classification of composite articles)
(base metals and articles of base metals)
• articles of base metal containing two or more base metals
• are to be treated as articles of the base metal
predominating by weight over each of the other metals
• including articles of mixed materials treated as base metal
under the GIRs
Session III
If there is no Rule 1 application:
Classification according to the principles of Rule 3 (a), (b) or (c)
Session III
Rule 3 (a) does not apply to composite goods :
‘(…) when two or more headings each refer to part only of the
materials or substances (…) headings are equally specific’
Therefore :
Session III
• According to the principles of Rule 3 (b) or (c) (if (b) does not
apply)
• Classification as if the good consists of the material or
component which gives the whole its essential character
Session III
Essential character :
• Nature of the material or component
• Bulk
• Quantity
• Weight
• Value
• Role of constituent material
But also : the individual functions of the components
Session III
Some examples (1):
• Clothes hangers of wood with metal hook
• Article of wood: 44.21
wood = function
Session III
Some examples (2):
• Hollow profile of plastics with magnetic strip inside
magnetic strip = role
• Permanent magnet: 85.05
Session III
Some examples (3):
• Cat’s eyes (road reflectors) consisting of a rubber block with
glass reflectors on opposite sides
glass reflectors
• Article of glass: 70.14
Session III
• In many cases not possible to determine the “essential
character”
• Application of Rule 3 (c):
Last heading in numerical order
Meriting equal consideration
Session III
An example :
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Concentrate of anti-freezing liquid, consisting essentially of:
ethyl alcohol; and
water mixed with small amounts of:
a. anionic surface-active agent
b. methyl ethyl ketone
c. colouring matter and
d. depending upon the formulation, monoethylene glycol
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Intended for windscreen defrosting or windscreen cleaning
after dilution with water
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22.08 or 38.20
38.20 (anti-freezing preparation)
Session III
Composite goods
Any questions?
Session IV
Classification of sets
Guest speaker: Mr. Ed De Jong, Senior Technical Officer WCO
THAT’s ALL !
(for today)

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